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How an Irrevocable Trust Can Lead to Litigation


Although many Florida estate planning trusts are revocable by the settlor–i.e., the person making the trust–there are also situations where an irrevocable trust may be used instead. As the name implies, an irrevocable trust cannot simply be amended or ended by the settlor at-will. And in fact, if there are problems with the administration of an irrevocable trust, it can lead to extensive estate litigation.

Father Manages to Dismiss Trust-Related Lawsuit Against Children After 4 Years

For example, a Florida appeals court recently weighed in on a long-running estate dispute between a father and two of his daughters over the management of an irrevocable trust. The case, Baden v. Baden, deals with a trust established by the father and his then-wife in 2012. (The wife has since passed away.) The parents executed the trust as irrevocable, naming their three adult children–two daughters and a son–as primary beneficiaries and co-trustees.

Unfortunately, disagreements arose between the daughters on one side and the father and son the other, over the “handling of the trust’s assets,” according to court records. Two years after the trust was established, the father ended up filing a lawsuit against his children. Some of the claims in this lawsuit did not directly relate to the irrevocable trust itself; rather, they alleged the children failed to repay the father for “various monies he had loaned to them.”

In any event, the father and his children resolved all of the trust-related claims in the lawsuit in a December 2014 settlement. Among other things, this settlement replaced the children as co-trustees with a single successor trustee (who was later replaced by a second successor trustee). The successor trustee then continued to litigate the underlying lawsuit against the father, which significantly depleted the trust’s assets from about $400,000 to around $269,000.

At one point, the two daughters urged the second successor trustee to pursue additional claims against their father–again, in the context of the still-pending lawsuit originally filed by the father back in 2014. The trustee declined to do so, prompting the daughters to request a court order compelling the trustee to act.

The father then decided to voluntarily dismiss the remainder of his lawsuit, thereby making his daughters’ attempts to add new claims irrelevant. But the trial judge refused to dismiss the case, noting the court retained jurisdiction over the 2014 settlement, as well as the trust itself. The Florida Second District Court of Appeal reversed the trial judge, however, explaining that the father’s voluntary dismissal effectively deprived the court of any further jurisdiction.

Speak with a Fort Myers Trust Attorney Today

Four years of litigation over the management of a trust represents a significant drain not just on the trust’s assets, but also on the relationship between family members. This is why it is so critical to make sure your estate plan is designed to minimize family conflict rather than promote it. If you need advice from a qualified Fort Myers estate planning lawyer in setting up a revocable or irrevocable trust, contact the Kuhn Law Firm, P.A., at 239-333-4529 today.

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